Tech Data was hit with a fine of more than $83.7 million this week in France, where officials said the Pinellas County-based technology distributor worked with Apple and a third U.S. company to thwart French competitors.
The fine is one of the largest business penalties ever assessed against a Tampa Bay area company, though it’s less than the $137.5 million that WellCare Health Plans of Tampa agreed to pay in 2010 to settle federal civil lawsuits accusing it of overcharging taxpayers for Medicaid and Medicare services.
WellCare also agreed to pay another $80 million to settle a criminal charge of conspiracy to defraud the Florida Medicaid program and the Florida Healthy Kids Corp.
And Tech Data’s fine is a fraction of the record-setting $1.2 billion that the French government is seeking from Apple in the same antitrust case. Another distributor, Ingram Micro, based in Irvine, Calif., was fined more than $69 million, putting the total amount of fines levied at more than $1.32 billion.
Tech Data, the bay area’s largest public company by revenue, said it was aware of the fine and it noted that it had publicly disclosed the French allegations against it in an annual report filed with the U.S. Securities and Exchange Commission.
“We are determining how we will respond and therefore do not plan to provide additional comment at this time, as this is a pending legal matter,” the company said in a statement released through spokesman Bobby Eagle.
The case started with dawn raids in June 2013, when investigators with the French Autorité de la Concurrence, or competition authority, seized documents concerning sales of Apple products in France from 2005 to 2013.
French authorities said Monday that Apple, Tech Data and Ingram Micro worked as a cartel to prevent independent distributors from offering lower prices or promotions for Apple products such as the iPad, though not the iPhone.
“Apple and its two wholesalers agreed not to compete and prevent distributors from competing with each other, thereby sterilizing the wholesale market for Apple products,” competition authority president Isabelle de Silva said in announcing the fines. “Apple has abused the economic dependence of these (independent) distributors on it by subjecting them to unfair and unfavorable commercial conditions compared” to its wholesalers, Tech Data and Ingram Micro.
French authorities began the investigation in 2012 after receiving a complaint from eBizcuss, an independent distributor of high-end Apple products. Litigation over the case ended in late 2017, French officials said. In its 2019 annual report, Tech Data said the French agency was pursuing charges against it and the other two companies, but said it couldn’t say whether or how much it might have to pay in the case.
While $83.7 million is a lot of money, it is a sliver of Tech Data’s business in Europe. In 2019, the company’s European sales were $20 billion, or more than 53 percent of its total sales of $37.2 billion.
The fine comes during a turbulent week for Tech Data, which, like many U.S. corporations, has seen its share price battered in the frantic Wall Street sell-off over the coronavirus’ disruption of the U.S. economy.
The price for shares of Tech Data have fallen from more than $143 at the beginning of March to under $109 at the end of trading Monday, a drop of 24 percent.
Asked on Monday whether the decline in its price share could affect Tech Data’s planned sale to New York-based private equity firm Apollo Global Management, which has agreed to pay $145 per share in a $6 billion deal, Eagle said, “as previously announced we anticipate closing of the transaction in the first half of this year. We are not updating or revising that disclosure at this time.”